Egypt finds itself navigating a delicate balancing act at the intersection of surging domestic demand, structural supply constraints, and grid stability targets. A combination of natural field declines-most notably at the flagship Zohr offshore field-and heightened residential cooling demand during intense summer heatwaves has strained the country’s natural gas balance sheet. Simultaneously, while renewable energy ambitions remain central to long-term national policy, capacity additions face persistent bottlenecks around grid integration, financing timelines, and storage infrastructure, preventing clean energy from absorbing rapid peak-load spikes in the immediate term. What exacerbates the problem is the fact that the government expects an 8% rise in electricity demand over last year’s record peak of 40,000 megawatts (MW).

Fuel Oil Steps In

To honor its commitment to prevent residential power outages and eliminate public load-shedding, the government has adopted a pragmatic, albeit fiscally and environmentally taxing, stopgap strategy. Central to this plan is a temporary return to heavy fuel oil, or mazut, as an emergency thermal backstop for power plants.

According to Mohamed Atia, Process Engineer at the Egyptian Refining Company (ERC), the government’s decision to prioritize uninterrupted electricity for households during the summer reflects a strategic reallocation of natural gas toward the power sector. “During the summer, electricity generation consumes around 60–65% of Egypt’s natural gas, while peak electricity demand has exceeded 39 gigawatts (GW) in recent years due to extreme temperatures and increased air-conditioning use.”

“To maintain uninterrupted power for households, some industrial facilities have switched to fuel oil (mazut) or adjusted production schedules as gas supplies became more constrained. This strategy has successfully prevented power outages for consumers, but it has effectively shifted part of the energy burden to industry through higher fuel costs and lower operational efficiency,” said Atia who is also Head of the energy Policies Committee as El Adl Party told Egypt Oil & Gas.

Why Return to Mazut?

As China returned temporarily to coal as an alternative solution to solve its energy supply gap amid the war, Mazut becomes a more suitable solution for Egyptian factories for powering their operations as a more accessible solution than natural gas.

“From an energy security perspective, fuel oil (mazut) is more reliable than natural gas during geopolitical tensions not because it is a superior fuel, but because its supply is more resilient and less vulnerable to disruption,” said Atia.

“Natural gas depends on continuous domestic production, pipeline imports, or liquefied natural gas (LNG) cargoes, all of which can be affected by regional disruptions. In contrast, mazut can be stored for months in strategic reserves and transported more flexibly, making it a reliable backup fuel during supply constraints,” he added.

Despite ongoing tensions in the Arabian Gulf and the Strait of Hormuz, the petroleum sector has successfully bolstered its strategic reserves of petroleum products, ensuring the stability of the local market and meeting the needs of various sectors, most notably the electricity sector.

A source from the Egyptian General Petroleum Corporation (EGPC) recently stated to the News Room website that current stocks of petroleum products are sufficient to meet the country’s needs for up to three months.

EGPC pumps about 15,000 tons of Mazut daily to power generation plants to keep electrical units operating and support the stability of the national grid, particularly during peak demand periods.

The current Mazut stockpile stands at around 800,000 tons, providing a secure reserve to meet the needs of power plants.

Costs Complications

In March, Prime Minister Mostafa Madbouly said the country’s monthly natural gas import bill has surged from $560 million to $1.65 billion, reflecting a sharp $1.1 billion increase since the outbreak of the US-Israeli war on Iran.

To manage mounting costs, the government raised natural gas prices for industrial consumers in May. Cement producers pay $14 per million British thermal units (MMBtu), while iron and steel manufacturers, non-nitrogen fertilizer producers, and petrochemical companies pay $7.75 per MMBtu. Other industrial activities are charged $6.75 per MMBtu.

In April 2025, mazut prices for industries were EGP 10,500 per ton, up from EGP 9,500 per ton. Although the increase is less significant than recent natural gas price hikes, it continues to add pressure on manufacturers already coping with rising operating expenses.

“Higher fuel prices directly increase production costs because energy is a major component of manufacturing, operations, and transportation expenses. Consequently, increases in natural gas or mazut prices raise the cost of locally manufactured products, particularly in energy-intensive industries such as fertilizers, cement, ceramics, iron and steel, and glass,” said Wafaa Ismail, Energy Sector Head at Environmental compliance office, Federation of Egyptian Industries (FEI).

“If domestic production costs rise while imported products originate from countries with cheaper energy or greater government subsidies, Egyptian manufacturers may lose part of their price competitiveness. This could squeeze profit margins or force producers to pass higher costs on to consumers,” she added.

Mazut’s Environmental Costs

Mazut is a heavy, low-quality fuel oil. It also generates a greater amount of power at a lower cost, but it produces 20–30% more carbon dioxide (CO₂) emissions than natural gas per unit of electricity generated. When burnt, it releases toxic gases, like sulphuric acids and nitrogenous acids. These emissions contribute to air pollution, respiratory illnesses, acid rain, and climate change, while its high sulfur content also increases equipment corrosion and maintenance costs.

As temporarily as it may seem, utilizing Mazut doesn’t provide the perfect, most sustainable alternative in the long run.

Atia explained that utilizing natural gas remains the preferred fuel due to its higher efficiency; combined-cycle plants achieve around 55–62% efficiency compared to 35–42% for conventional fuel oil-fired units. Fuel oil also produces 20–30% more CO₂ and higher sulfur emissions, increasing operating and maintenance costs.

According to Ismail, greater reliance on high-emission fuels such as mazut increases the risk of additional costs or environmental restrictions in markets like the European Union (EU), particularly as international trade increasingly incorporates carbon-related regulations.

This makes it increasingly important for manufacturers to secure stable fuel supply contracts, improve energy efficiency, and gradually transition toward renewable energy sources as she noted.

Toward a Cleaner Industrial Future

The Ministry of Industry has launched the Sun of the Industry (Shams el Sena‘a) initiative which aims to install rooftop solar panels across 7,000 factories with a combined capacity of 1,000 megawatt (MW) of clean energy and reduce reliance on traditional fossil fuels.

Solar power Installations will be tailored according to each factory’s consumption rates, eventually covering 26% of its electricity consumption.

According to Ismail, the initiative will help cover a significant share of daytime electricity demand, including lighting, cooling systems, pumps, and certain production lines, thereby reducing electricity and fuel costs.

For now, mazut remains an essential bridge fuel helping Egyptian factories secure electricity supplies during one of its most challenging summer energy seasons. However, its environmental footprint and lower efficiency underscore that it can only serve as a temporary solution while the country accelerates domestic gas production, renewable energy deployment, battery storage, and industrial energy efficiency.